The European Parliament will vote on 14 November on the final approval of the European Electronic Communications Code. This is nearly the last step to completing the reform first launched by the European Commission in 2015. The code overhauls the EU's telecom regulatory framework, prepares the way for new fibre and 5G networks and extends consumer protections both for telecom and OTT services. In addition, the European Parliament added a new cap on intra-EU call prices.
Digital Single Market
The Juncker Commission has made developing a Digital Single Market (DSM) a key part of its policy and aims to complete the landmark legislation before its term expires in May 2019. As every part of the economy undergoes digitisation, a physical single market is no longer enough - borders need to disappear online as well. The DSM strategy was first presented in May 2015 and a connectivity agenda with proposals for the telecom sector was unveiled in September 2016.
The DSM strategy includes a wide range of measures, with 16 main themes. Many are aimed at supporting cross-border e-commerce, through measures such as simplified VAT rules and an end to geo-blocking. Other policies are more ambitious and long term, such as developing EU policies for the cloud, AI and competitiveness.
Several of the themes have already been addressed, such as new rules to prevent geo-blocking. Since this spring, TV providers can no longer stop subscribers from using online services in other countries, and from December, online traders can no longer turn away customers in other EU countries.
Broadband targets
All the Commission's ambitions have one common element: connectivity. The policies are expected to help achieve new targets for broadband connectivity set by the Commission for 2025:
- Gigabit speeds for digital businesses and public sector institutions such as government bodies and schools
- Access to a minimum 100 Mbps for all households, urban and rural
- 5G coverage for all major cities, roadways and rail lines
The Electronic Communications Code lays the groundwork for realising these goals. It includes a reform of the telecom regulatory framework, harmonised spectrum bands and deadlines for 5G, and increased consumer protection for the growing range of online services.
Regulatory changes
Reform of the telecom regulatory framework led to intense negotiations and lobbying. For the first time, the Commission introduced the new goal of connectivity in regulation, rather than just promoting competition. The package needed to strike the right balance between protecting competition and consumer interests and stimulating (co-) investment in faster networks. Important changes include:
- New opportunities for national regulators to require access to civil infrastructure and important network elements. For example, mandatory access to in-building wiring or near-building distribution points can be imposed even on network owners not considered significant market players.
- Regulatory relief for co-investment in fibre networks. Significant market players that agree long-term deals with other providers on co-investment or access to 'very high-capacity networks' (read: FTTP) and submit to binding conditions with national regulators can avoid the standard access regulations for seven years or longer.
- Longer market review periods for standard ex ante regulatory decisions, of five years rather than three, to provide more certainty for operators.
- The European Commission gains the right to set a single EU voice termination rate.
- The ability to regulate two dominant network operators. The 'joint dominance’ access regulation was strongly opposed by operators but was kept in the final version of the code.
5G on the way
As for mobile spectrum, the Commission wanted more harmonisation at the EU level, so operators could expect similar licence conditions and prepare for a quicker 5G roll-out. However, national governments proved reluctant to give up their control of spectrum auctions and the lucrative licence fees. A proposal to extend the minimum duration of spectrum licences to 25 or 30 years was rejected, and the final compromise was 20 years, not much different from the current situation.
There was progress on naming the spectrum bands to be used for 5G. The 700 MHz band needs to be released by mid-2020 to mobile operators, and the 3.5 GHz and 26 GHz frequencies must be made available by end-2020. Each country will still be allowed to set its own licence and auction terms, after the Commission's proposal for a peer review was made only voluntary.
OTTs to face consumer regulation
In terms of consumer protection, the code further extends regulations covering telecom services to OTT services. The code defines 'electronic communication services' subject to regulation in three categories: internet access services; interpersonal communication services, provided either on the basis of numbers or without numbers (read: OTTs); and conveyance of signals, such as M2M or broadcast services. The EU code requires the member states to harmonise their regulations across the different types of services, so consumers as well as small businesses benefit from the same protections.The first category of ECS, covering traditional ISPs, is already subject to a number of basic requirements under the Telecom Single Market regulation of 2015, such as providing customers with standard information on quality of service (such as expected broadband speeds), cancellation and equipment fees, and compensation provided for service failures. The new code will extend these basic contract provisions to OTT services as well.
Implementation period
The European Parliament approved its version of the code in October 2017, and the Council followed in November 2017. A compromise on the final version of the legislation was reached in June this year. The deal includes a measure added by the European Parliament to cap the price of calls between EU countries. These price caps will take effect already in May 2019, while most of the other elements of the code will not come into effect for another 2-3 years.
The final step is formal approval from the Parliament, expected on 14 November, and the Council, planned for later this month. The EECC will then be published in the official gazette, and EU states will have two years to implement the measures (three years for new end-user rights). During the transition period, Berec and the European Commission will develop guidelines on implementing some of the regulatory changes, such as the new network access and co-investment provisions and the harmonised spectrum and termination rates.
